Import surge buffets industry
Bharat Sanchar faces call to pay licence fee
Wanted: Connoisseurs for Darjeeling tea
Mountain Kingdom on charm offensive
Cheaper funds for bluechips
Bank forum to launch protest from May 15

New Delhi, May 6: 
The industry is not out of the woods. That’s the message from a Confederation of Indian Industry (CII) survey in which most companies blame growing imports for their woes.

Of the 132 industries polled for production trends between April 2000 and March 2001, 31 suffered negative rates, 61 reported moderate, 29 good and 11 excellent growth rates.

The study categorises rates above 20 per cent as excellent, between 10 and 20 per cent as good and between 0 and 10 per cent as moderate.

According to the report prepared by CII’s Association Council (Ascon), three-wheeler makers fought back from a negative growth of 2 per cent in 1999-2000 to 7 per cent in the last financial year while textile machinery companies clawed back from -2.3 per cent to a heady 20 per cent.

Others which saw production shrink in 1999-2000 but recovered were the tea industry, which logged a 1 per cent growth rate compared with minus 4 per cent, refractories to 2 per cent from minus 5 per cent and crude oil to 1.6 per cent from minus 2.2 per cent.

Reeling under negative growth rates were firms which manufacture electrical machinery and equipment. Their problems spring from a contraction in demand and the fact that few mega power projects took off during the year.

Growth in the transformer industry dipped to minus 4.1 per cent, electric motors to minus 4.1 per cent and motor starters to minus 8.2 per cent. Makers of power cables and transmission line towers were worse off, struggling at minus 21.7 per cent and minus 12.4 per cent respectively.

Auto firms, which many say reflect the state of the economy, were in reverse gear. The situation was particularly disturbing in the case of scooters, where the growth rate plunged to minus 30 per cent from minus 4 per cent in the previous financial year. Even car companies, which had been going steady last year, saw growth rates fall to minus 13 per cent from a scorching 48 per cent in 1999-2000. The production of medium and heavy vehicles fell 21 per cent against a 39 per cent increase.

Troubles in the auto industry spilled over to component makers, where growth plunged to 15 per cent from 30 per cent.

Phosphate fertiliser firms grew at the rate of 9.7 per cent from 5.9 per cent a year back, nuclear power generation increased at the rate of 27.4 per cent against 10.3 per cent, nylon tyre yarn output was up 8.7 per cent compared with 3.3 per cent, while the construction industry grew at 2 per cent against 10 per cent in 1999-2000.

Of the 52 sectors surveyed for exports, 15 logged excellent growth rates, 15 registered high, 12 posted moderate and 10 suffered negative growth rates. Malted food, glass products, textile machinery and nylon filament yarn are among the other companies which have clocked higher growth rates in exports.

The survey outlook for the six months to September is positive, provided the industry can square up to the threat of imports.


New Delhi, May 6: 
The state-owned Bharat Sanchar Nigam Limited (BSNL) may soon have to cough up licence fees for offering basic telephony, national long-distance (NLD) and mobile services.

The department of telecommunications (DoT) will assess the licence fees payable by BSNL and will shortly set up a group for the purpose. An internal DoT note, intimating the licence fee rates payable by BSNL for basic services and national long-distance services, states, “The rates for basic services vary between 8 per cent to 12 per cent of gross revenue, depending on the category of the circle.”

Further, it adds, “The rate for NLDO has been communicated as 10 per cent to plus 5 per cent for the universal service obligation.”

Both the NTP-99 and the government’s stated policy on the telecom sector are silent on licence fees payable by BSNL in respect of basic, cellular and NLDO services.

As DoT sources pointed out: “At present we have no method to collect and compile data in either for revenue by segment or cost by segment. The operational separation of such activity has also not been done. So we can undertake only ad-hoc calculations.”

Based on the provisional October-March 2001 data and the budgetary estimates of revenue for 2001-02, the department has worked out an estimate of the licence fee payable by BSNL.

DoT has assumed that 98 per cent of the revenue is derived from rent and call charges and 40 per cent of rent and call charges is attributable to national long distance operations.

Thus, it arrives at a total licence fee of Rs 592 crore and Rs 1,290 crore in 2000-01 and 2001-02 respectively, for basic services offered by BSNL. The licence fees payable for NLDO is estimated to be at Rs 543 crore and Rs 1,182 crore respectively, for 2000-01 and 2001-02.

DoT has also quantified the losses associated with village public telephone, rural telephone lines and low-calling urban telephone lines.

Based on data of capital employed and indicative costs and revenue, the annual burden to BSNL is put at about Rs 6,500 crore. This also includes the operating costs, licence fees at 10 per cent of revenue, depreciation at an average rate of 8 per cent and cost of capital at 10 per cent.


Calcutta, May 6: 
Faced with a problem of marketing about 60 per cent of their tea production, the Darjeeling Planters Association (DPA), the apex body of Darjeeling tea producers, has initiated talks with Gujarat Tea Processors and Packers to develop a Darjeeling blend and to launch Darjeeling tea bags in western India.

Gujarat Tea Processors and Packers market the Wagh Bakri brand which is extremely popular in areas like Gujarat and Rajasthan.

Confirming the move, DPA chairman R. K. Dixit said: “I have discussed the issue with Piyush O. Desai, chairman and managing director of Gujarat Tea Processors and Packers. He is willing to lift Darjeeling tea and put them in tea bags.”

Darjeeling planters had been talking about developing a common blend for quite some time now. But so far they have not been able to come up with one.

Speaking to The Telegraph, Desai said: “We are keen to lift Darjeeling tea and talks on the issue are on with the Darjeeling planters. I have told them that running a promotional campaign for a couple of months will not help the industry which is perennially sick. We have to find out some alternative channel for marketing the rains tea, which forms about 60 per cent of the total Darjeeling production.”

On the marketing side, the biggest problem plaguing Darjeeling tea is the lack of domestic buying support.

A country which consumes 625 million kgs of tea is unable to absorb 10 million kgs of Darjeeling tea. Hence, the major issue facing the Darjeeling tea industry now, is price realisation.

“About 40 per cent of our total production fetches a good price and the rest 60 per cent, which are essentially rains tea, is sold below the cost of production. Since Darjeeling tea is not so much popular in the domestic market, we have to accept the price we get at the auctions,” planters said.

On their part, the Darjeeling planters are also keen to market their tea in bags.

Desai already markets Darjeeling tea under the brand name D’Ling in cheddar wooden chestlets, available in 25 and 100 gms. “I already have the distribution network. So marketing of Darjeeling tea bags will not be a problem,” he added.

The company also sells tea bags under the brand name Tea Quik and packet tea under the brandnames Good Morning, Wagh Bakri and Mili.

The company blends and packs more than 10 million kg of tea annually. Currently, the company’s brands are available at more than 70,000 retail outlets in Gujarat, Rajasthan and the overseas markets.


Kathmandu, May 6: 
When Chandrashekar Bannerjee of Calcutta, received a rousing welcome at Tribhuvan International Airport on May 1, he was caught completely unawares. But the welcome was just part of what the Mountain Kingdom has in store for royalty—the Indian tourist. In fact, there is much more in store.

Nepal is eager for the high-flying Indian tourist to put the country on his itinerary this summer. Not that it has to try very hard, what with its famed temples and the snow clad Himalayan peaks. But it is not taking any chances and has lined up a host of freebies. From privilege cards with discounts, to priority at crowded temples, its meant to make Indians feel they are the kings.

Indians, who formed the largest chunk of visitors to Nepal, had almost stopped going there, following hijacking of Indian Airlines flight IC-814 from Kathmandu to Delhi. Then, last December, Kathmandu erupted in anti-India fury over rumours that Bollywood hearthrob Hrithik Roshan had made anti-Nepalese comments in a television interview.

A 32 per cent decline in tourist arrivals from India last year had the Nepalese government and business all worried.

But Nepal feels things are looking up again, especially with the ‘Festival of Life’ aimed at Indian tourists. “Actually there is an increase of 13 per cent in Indian tourist influx in the first quarter of this year compared with the corresponding period last year,” Pradeep Raj Pandey, chief executive officer, Nepal Tourism Board (NTB) said. “The figure would have been much more but for the Hrithik episode,” he added.

Several hotels, restaurants, department stores, airlines and travel agencies from all over the kingdom have pledged support to the campaign.

The discounts vary between 10 to 30 per cent. According to K. B. Adhikari, managing director, Hotel Snowland at Pokhra and NTB member, discounts on hotel rooms is about 30 per cent while that on food varies from 20 to 30 per cent. “NTB is targeting a 15 to 20 per cent increase in sales in response to the festival,” he added.

The privilege cards will be available at the Nepalese embassy in Delhi, Royal Nepalese consulate in Calcutta, Royal Nepal Airlines offices in Delhi, Mumbai and Bangalore and Indian Airlines ticketing offices.

Since awareness about the festival is low in India, NTB will tieup with consumer goods firms in India for a joint media promotion, Pandey said.

What’s more, as part of the festival, privilege card holders will be entitled to priority darshan and puja at the Pashupatinath temple. The celebrations will feature various events like Jomson festival, Manakamna festival, besides sporting events, musical extravaganzas, bungee jumping and the like.


Mumbai, May 6: 
The cost of raising fund by top rated companies from the primary debt markets is expected to reduce in the immediate term following the contraction of spreads between a government security and corporate paper of corresponding maturity.

The yields at corporate bond market is benchmarked to that of the yield in similar government securities. However, in the secondary market for corporate debt, the spread over sovereign yields have recently seen a decline as the five year maturity plummeted by over 15 basis points to 80 basis points.

In fact, the yield on a five-year AAA benchmark, which had rallied to 10.50 per cent in the previous fortnight, is now said to be close to around 10.30 per cent.

“Though the bond issuance’s of highly rated companies are negligible, yet the markets are lapping it up. The contraction in spreads, which has been in the case of five year maturity, is likely to spread to the one to three year segment,” said Sanjeet Singh, senior debt analyst with ICICI Securities. He indicated that the trend should now reflect in the primary market as well.

Spreads in the one to three year segment —now in the range of 95-110 basis points — is expected to come down by another 15-20 basis points shortly.

Sources however, said that it is still too early to comment whether the reduction in spreads will lead to any substantial growth in primary debt market issuances by AAA rated companies. A clearer picture is expected to unfold after the cut in Bank Rate by the Reserve Bank of India takes effect.

With a 50 basis point cut in the benchmark interest rate to 6.5 per cent expected in due course, analysts said that action is largely expected in the longer end of the yield curve even as the markets have already factored in such a cut.

For instance, though yields at this end have already declined by close to 40 basis points recently, the 10-year benchmark is now put at 10.07 per cent and market circles expect the yield to go down further to 9.75 per cent.

“The 10-year benchmark may move down to 9.75 per cent due to expectations of further reduction beyond the first 50 basis points,” Singh added.

Recently, when the central bank brought down the repo rate by 25 basis points to 6.75 per cent, market expected a cut in Bank Rate. Subsequently, RBI brought down the reverse repo rate by a similar margin to 8.75 per cent.


Calcutta, May 6: 
The United Forum of Bank Unions (UFBU) will launch a countrywide protest from May 15 against non-payment of salary arrears to the employees of the three weak banks — Indian Bank, Uco Bank and United Bank of India.

S. R. Sengupta, general secretary of All India Bank Officers Confederation, one of the major constituents of UFBU, said, in spite of satisfactory and encouraging performance by these three banks, no steps have been taken for the disbursement of arrears to the employees and officers.

UFBU alleged that these banks have got enough money to pay the ex-gratia compensation packages to those employees who opted for the voluntary retirement scheme. However, legal dues to the regular employees are not being disbursed.

The government had placed moratorium on arrears payment for two years. The settlement provision says is “rescheduling” of the arrears if the bank management faces any difficulty in disbursement thereon in one lump.

The issue regarding the payment of arrears is not exclusive to these three banks’ employees. This settlement has been made at the industry level.

“We have taken the decision to launch a nationwide protest against the government’s step-motherly attitude towards these banks. If the government fails to take any meaningful step, then UFBU will meet on June 5 to decide the future course of action,” Sengupta said.


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